A Concerning Pattern: Pharma Mulls UK Divestments as Government Action Lags in Life Sciences
Multiple major pharmaceutical companies—including Merck and AstraZeneca—have recently announced cancellations or pauses to landmark research and development investments in the UK, with Merck scrapping a £1 billion London research hub and AstraZeneca pausing a £200 million Cambridge expansion234.
The primary reason cited by pharma firms is a challenging commercial environment in the UK, exacerbated by government policy decisions such as the health secretary’s refusal to negotiate on UK drug prices, which are already lower than many global peers23.
The UK government increased the mandatory repayment rate from pharma firms’ NHS drug revenue from 15% to 24%, intensifying industry complaints about the UK’s unattractive investment climate3.
UK national spending on medicines has dropped from 15% of health budgets a decade ago to 9% today, a shortfall of about £12 billion per year that experts suggest would need reversing to restore pharma confidence3.
Despite private US investment into financial services and some sizable biotech VC raises, the freeze and withdrawal of pharma capital are seen as a major strategic blow, potentially threatening Britain’s global standing in life sciences and the future of its science start-up ecosystem1234.
While pharma companies link their moves directly to UK drug price policy, some independent analysts note these are also symptoms of global pressures:
the maturation of the pharma business model, stronger competition from China, and changing economics of drug development globally3.
Across the sector, divestments and halted expansions are becoming common strategies as companies seek to streamline, address operational inefficiencies, and respond to both domestic policy and international market changes45.
Sources:
1. https://www.bioindustry.org/resource/uk-biotech-holds-firm-in-the-first-half-of-2025-bia-report-finds.html
2. https://observer.co.uk/news/business/article/big-pharmas-cash-pull-out-lands-blow-to-uk-economy
3. https://www.nature.com/articles/d41586-025-03001-y
4. https://www.chemistryworld.com/news/uk-loses-life-sciences-investment-as-pharma-companies-halt-expansion-plans/4022160.article
5. https://www.deloitte.com/il/he/Industries/life-sciences-health-care/research/life-sciences-mergers-acquisitions-divestitures-and-restructuring.html